Why diversify? US markets have been the place to be for a long time now; why should things change? In a nutshell—because they always do! In our recent semiannual presentation, we described the attractiveness of developed international markets, where, after a number of years of underperformance relative to US markets, valuations are cheaper and dividend yields higher. Here’s a nice blog entry from Ben Carlson that supports that position.
When Diversification Works By Ben Carlson
We are going out on a limb at the risk of being wrong and stating that we “believe” that the global equity markets are more volatile than average. Phew, it’s tough taking a stand. The basis for our bold declaration can be seen in some recent comments from a few financial publications:
"So far, 2016 has been something of a disaster around global markets."
"Wall Street Rises After a Brutal Week"
"There's a confluence of bad news around the world that really shakes investor confidence."
Howard Marks, chairman and co-founder of Oaktree Capital Management, is an interesting, pithy writer. We always read his occasional comments and musings on the investment markets, as they invariably include a great deal of reflection on past market conditions and perspectives. We found reviewing this recent publication worthwhile.
If you’re pressed for time, you could go to “Recent Developments” on page 11 and read from there.
If you’d like to read more of his work, it’s available here.
We also enjoyed his book, The Most Important Thing: Uncommon Sense for the Thoughtful Investor.
Occasionally we like to post articles that give you some insight into how we form our opinions or stay informed.